Which of the Following Material Events Occurring Subsequent to the Balance

question 48

Multiple Choice

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

• A)Sale of long-term debt or capital stock.
• B)Loss of a plant as a result of a flood.
• C)Major purchase of a business that is expected to double sales volume.
• D)Settlement of litigation, in excess of the previously recorded liability.

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Definitions:

Depreciation

The process of allocating the cost of a tangible or physical asset over its useful life, reflecting wear, tear, and obsolescence.

GDP Deflator

The GDP deflator is a measure of the level of prices of all new, domestically produced, final goods and services in an economy, acting as a gauge of inflation.

Real Per Capita GDP

The measure of a country's economic output that accounts for its number of people and adjusts for inflation, indicating the average economic well-being of its citizens.

Net Exports

The value obtained by subtracting a country's total value of imports from its total value of exports, representing a component of a country's GDP.